Budget 2026: Picking predictability over populism

FOR BUSINESSES AND INVESTORS, Budget 2026 is less about spectacle and more about signal — predictability, continuity, and fiscal responsibility. The government has held the fiscal deficit at 4.4% of GDP for FY26, with a glide path to 4.3% in FY27. In a volatile global environment, this restraint is reassuring. Importantly, consolidation has not diluted growth spending. Capital expenditure remains robust at ₹12.2 lakh crore (over 3% of GDP), reaffirming the belief that infrastructure-led investment crowds in private capital. For boards planning long-term commitments, the message is clear: India’s macro framework is stable and not hostage to short-term politics. Backing future growth engines The Budget avoids scattergun allocations and instead places large bets on a few strategic sectors. The ₹10,000-crore allocation for biotechnology research aims to convert India’s scientific capability into commercial scale, particularly in biopharma and agri-biotech. Equally significant is the ₹40,000-crore outlay for electronic manufacturing, reinforcing India’s integration into global supply chains. These measures reflect a shift from generic incentives to sectoral depth. Execution will determine outcomes, but the direction is unmistakable — India wants to be a producer of high-value goods and not merely a consumption market. Certainty for long-term capital The first pillar of the tax proposals focusses on attracting patient foreign investment. The standout measure is the 20-year tax holiday for data centres up to 2047, aligned with the Viksit Bharat horizon. Data centres are capital-intensive with long payback cycles; such multi-decade certainty directly influences investment committees. More crucially, data centres are economic multipliers — driving power generation, real estate, employment, and digital ecosystems. By anchoring this sector, India is building the infrastructure of the digital economy. Complementing this is the 15.5% safe harbour regime for GCCs. India already hosts a significant share of global operations; this move reduces transfer-pricing risk and litigation uncertainty, strengthening India’s value proposition in corporate boardrooms. Lowering cost of doing business The second pillar is structural simplification. Penalties for technical defaults have been replaced with fees; several offences are decriminalised and imprisonment terms reduced — signalling a shift from deterrence to proportionate compliance. Two changes will have immediate impact: Stay of demand pending appeal now requires only 10% pre-deposit instead of 20%, easing cash-flow pressure in genuine disputes. Timelines for revised and updated returns have been extended, recognising the complexity of modern filings. Together, these reduce friction and the hidden tax of uncertainty. Market concerns and the misses Not all proposals have been welcomed. The increase in STT on equities and F&O has unsettled markets. More significant are the gaps. R&D outside select sectors remains under-incentivised. India’s private R&D intensity trails peers, and stronger tax credits could have catalysed investment. While electronics manufacturing receives focus, broader MSME-led and export-oriented manufacturing lacks comparable structural support. Stability first, execution next Budget 2026 is a Budget of maturity rather than maximalism. It reinforces fiscal credibility, offers long-term certainty to digital and services capital, and meaningfully simplifies tax administration. For investors, the dominant message is predictability. The Budget has laid a steady foundation; the challenge now lies in execution and in ensuring that future Budgets convert stability into structural transformation. (The author is chairman & CEO, Dhruva Advisors. Views are personal.)

Budget 2026: Picking predictability over populism

Sign in to read full story